KUWAIT, 24 June — Kuwait Finance House (KFH) sold $750 million in additional tier 1 Sukuk, or Islamic bonds, on Wednesday (23 June), Reuters reported.
According to the report and documents reviewed by Reuters, the bonds will be non-callable for 5-1/2 years, and were sold at 3.6% which was tightened from the initial price guidance of around 4% after more than $1.9 billion in orders.
The deal was arranged by many banks and financial institutions including KFH Capital, Standard Chartered, Boubyan Bank, Dubai Islamic Bank, Dukhan Bank, Emirates NBD Capital, First Abu Dhabi Bank, and Mizuho Securities.
lately, Gulf countries saw many similar debt sales as banks, companies, and governments in the region are taking advantage of low rates to boost finances damaged by last year’s oil price crash and the COVID-19 pandemic.
Additional Tier 1 (AT1) bonds are designed to be perpetual, but issuers can redeem or “call” them after a specified period.
According to a Reuters report, Ahli United Bank, this month sold $600 million in AT1 Sukuk at 3.875%, also non-callable for 5-1/2 years.
National Bank of Kuwait, the country’s largest, and Boubyan Bank also issued bonds this year, as did Kuwait’s Equate Petrochemical Company.
Kuwait faced a liquidity crunch last year after an historic dive in oil prices and the COVID-19 pandemic. It is in a standoff between successive governments and parliaments over a law that would raise its debt ceiling and allow the government to tap international debt markets.